diff --git a/v2/pkg/templates/templates.go b/v2/pkg/templates/templates.go
index 9b42ef365..e18185520 100644
--- a/v2/pkg/templates/templates.go
+++ b/v2/pkg/templates/templates.go
@@ -186,7 +186,16 @@ func Install(options *Options) (bool, *Template, error) {
 			return false, nil, err
 		}
 		options.TargetDir = targetDir
-		if !fs.DirExists(options.TargetDir) {
+		if fs.DirExists(options.TargetDir) {
+			// Check if directory is non-empty
+			entries, err := os.ReadDir(options.TargetDir)
+			if err != nil {
+				return false, nil, err
+			}
+			if len(entries) > 0 {
+				return false, nil, fmt.Errorf("cannot initialise project in non-empty directory: %s", options.TargetDir)
+			}
+		} else {
 			err := fs.Mkdir(options.TargetDir)
 			if err != nil {
 				return false, nil, err
diff --git a/v2/pkg/templates/templates_test.go b/v2/pkg/templates/templates_test.go
index 3b906601a..658ecadb6 100644
--- a/v2/pkg/templates/templates_test.go
+++ b/v2/pkg/templates/templates_test.go
@@ -52,3 +52,48 @@ func TestInstall(t *testing.T) {
 	is2.NoErr(err)
 
 }
+
+func TestInstallFailsInNonEmptyDirectory(t *testing.T) {
+	is2 := is.New(t)
+
+	// Create a temp directory with a file in it
+	tempDir, err := os.MkdirTemp("", "wails-test-nonempty-*")
+	is2.NoErr(err)
+	defer func() {
+		_ = os.RemoveAll(tempDir)
+	}()
+
+	// Create a file in the directory to make it non-empty
+	err = os.WriteFile(filepath.Join(tempDir, "existing-file.txt"), []byte("test"), 0644)
+	is2.NoErr(err)
+
+	options := &Options{
+		ProjectName:  "test",
+		TemplateName: "vanilla",
+		TargetDir:    tempDir,
+	}
+
+	_, _, err = Install(options)
+	is2.True(err != nil) // Should fail
+	is2.True(err.Error() == "cannot initialise project in non-empty directory: "+tempDir)
+}
+
+func TestInstallSucceedsInEmptyDirectory(t *testing.T) {
+	is2 := is.New(t)
+
+	// Create an empty temp directory
+	tempDir, err := os.MkdirTemp("", "wails-test-empty-*")
+	is2.NoErr(err)
+	defer func() {
+		_ = os.RemoveAll(tempDir)
+	}()
+
+	options := &Options{
+		ProjectName:  "test",
+		TemplateName: "vanilla",
+		TargetDir:    tempDir,
+	}
+
+	_, _, err = Install(options)
+	is2.NoErr(err) // Should succeed in empty directory
+}
diff --git a/website/src/pages/changelog.mdx b/website/src/pages/changelog.mdx
index 01fa47a69..50208109b 100644
--- a/website/src/pages/changelog.mdx
+++ b/website/src/pages/changelog.mdx
@@ -16,6 +16,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixed
 
+- Fixed `wails init` to prevent initialization in non-empty directories when using the `-d` flag, avoiding accidental data loss [`#4940`](https://github.com/wailsapp/wails/issues/4940) by `@leaanthony`
 - Fixed missing `EventsOffAll` in runtime templates for all frontend frameworks [#4883](https://github.com/wailsapp/wails/pull/4883) by @narcilee7
 - Fixed Linux crash on panic in JS-bound Go methods due to WebKit overriding signal handlers [#3965](https://github.com/wailsapp/wails/issues/3965) by @leaanthony
 - Fixed code block range in "How Does It Work?" documentation [#4884](https://github.com/wailsapp/wails/pull/4884) by @msal4